* This article originally appeared on the Founder Institute website.
Crowdfunding’s Unparalleled Impact on the Startup Landscape
How crowdfunding's redefining the lean startup and creating an era of entrepreneurial creation
By Matt Ward
Crowdfunding's creating an enormous shift in the startup community. Where once only angel and VC backed companies could possibly go forth and attempt to innovate, a new player is emerging and exploding onto the scene. The effects of these waves are being felt across the world as small yet sophisticated startups are emerging and creating the high tech, future focused products that will define tomorrow.
The Origins of Crowdfunding
Kickstarter and Indiegogo, the monoliths of modern crowdfunding have advanced at unparalleled rates since their inception. Launched in 2009 and 2008 respectively to help the little guys to raise funding for creative projects and passions, they've both grown to become billion dollar businesses. They're revolutionizing the way we build startup, launch products and even contemplate commerce.
But Why is Crowdfunding Crushing It?
Crowdfunding's early and explosive success could be the subject of entire economics dissertations. Instead I'd argue for simplicity. The pure and easily accessible nature allows individuals everywhere the freedom to create and innovate.
Access to information, means to manufacture, manpower and even capital are quickly becoming mainstream options for inventors everywhere. Ideas guys who would once have bawked at the incredibly long and painful process of pitching VC's are finding themselves with an alternative option...the crowd.
Herein lies the true power of Kickstarter. Imagine instant access to hundreds, thousands, heck millions of potential customers without an ounce of ad spend. This outlandish idea a mere decade ago is a reality for creatives today as early adopting backers and inspired forward thinkers peruse the popular pages and seek out the latest and greatest.
The New Lean Startup
After the internet bubble burst and DotCom crash crushed the hopes and dreams of entrepreneurs, inventors and VCs everywhere certain steps were taken to improve the odds of success.
We're all familiar with Eric Ries. His book, the Lean Startup, stands as one of the pillars of modern money making. The principles of efficiency, iteration and rapid customer discovery drastically altered the software and startup scene.
Hardware however remained unfortunately unchanged. The incredibly prohibitive startup costs for manufacturing and product design have always artificially excluded small startups and founders. This dynamic is changing as the crowd controlled capital comes into play.